Drosophila HMG-D Gene. A transgenic line of Drosophila was obtained that contains a P-element with a beta-galactosidase reporter gene inserted 1.3 kd upstream of the HMG-D gene, which encodes a chromosomal protein. The HMG-D gene is ubiquitously expressed during early embryonic development but later in development is restricted to the nervous system. HMG-D protein was synthesized in E. coli, purified, and was shown to have a higher affinity for cruciform DNA than for double-stranded DNA. Thus HMG- D protein recognizes DNA conformation preferentially, rather than nucleotide sequence. The homozygous P-element insertion is lethal and results in embryos with striking defects in the ventral nerve cord. Zinc Finger Gene 367. Transgenic Drosophila line 367 was shown to contain a P-element inserted in the flanking region of novel zinc finger gene 367. The expression of zinc finger gene 367 is restricted to a subset of cells in the CNS and anterior sensory organs. The P-element insertion is a recessive lethal mutation; embryos with homozygous P-element insertions exhibit massive defects of the ventral nerve cord.